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He Qinglian
12/31/2012 http://www.hrichina.org/crf/article/6415
Increasingly frequent social conflicts and economic downturn have not
only presented China’s regional governments with overwhelming financial
pressure, but also caused the central government a serious funding
problem for its stability maintenance system.The Huge Cost of “Stability Maintenance”
Beginning in the late 1990s, local governments’ excessive resource
extraction led to a dramatic annual increase in social resistance and
organized mass incidents. There were 87,000 incidents in 2005, more than
90,000 in 2006,1 124,000 in 2008,2 and more than 280,000 in 2009.3
The types of social protest in China are determined by the country’s
special pattern of economic development. Economic growth in China
depends on real estate and the resources sector—petroleum, heavy
chemical industry, and mining. Social protests thus concentrate on these
sectors. The first major type of protest is land rights defense. This
includes housing demolition and eviction in cities and land requisition
in the countryside. The second major type involves environmental rights
defense, because pollution caused by the resources sector such as the
heavy chemical industry seriously endangers the wellbeing of the people.
And, the third type involves corruption among local government
officials. Many corruption cases have to do with local officials
embezzling land requisition compensation funds.
China’s public security expenditures (commonly known as “stability
maintenance expenses”) directly correspond to the growth of social
protests. As the number of protests increased dramatically in 2009, the
focus of local governments underwent subtle changes. The principle of
“development is the priority task” became “development is the priority
task and stability maintenance the foremost responsibility.” Government
agencies in charge of stability maintenance were given permanent status.
There are stability maintenance offices all the way from the central to
local governments. The Central Committee of the Communist Party of
China established a “Central Government Leading Group for Stability
Maintenance.” It administers the Central Government Office of Stability
Maintenance, located inside the Central Political and Legislative
Affairs Committee. This office, under the direct administration of the
CPC Central Committee, is responsible for rules of procedure and
coordination. A “stability maintenance” office (full name: “office of
the leading group for stability maintenance work”) can be found at every
level of government—from each province or autonomous region to every
city, county, village, neighborhood, even in major civic institutions
and business enterprises.
“Stability maintenance offices” must fully understand all social
development problems, not just those in the political and legal spheres.
Thus, they comprise not only the departments of public security,
procuratorate, the judicial system, and state security, but also
propaganda departments. This system also maintains a huge informant
network. For example, there are information staff members (i.e.
informants) at universities, middle schools, civic institutions,
business enterprises and in rural areas. According to a 2010 interview
published on Xinhua Net, Liu Xingchen, assistant to the director of
Kailu County, Inner Mongolia, and Party Secretary and Public Security
Bureau Director, bragged to the reporter that he “has a huge informant
network” and stays “highly alert” to any dissent and protest. How large
is this network? Let’s take a look at the numbers Liu Xingchen provided:
The number of informants under the Kailu County Public Security Bureau
is as high as 12,093. For a county with a population of 400,000,
excluding one quarter of the population who are underage, there is at
least one informant for every 25 adults.4
As social protests increase and the stability maintenance system
becomes systematized, the cost of stability maintenance has risen
rapidly. According to the Ministry of Finance report on central and
local government budget implementation, China’s expense for public
security was 405.976 billion yuan [~$65.18 billion] in 20085 514 billion yuan [~$82.52 billion] in 2009,6 548.606 billion yuan [~$88.08 billion] in 2010,[7] and 624.421 billion yuan [~$100.25 billion] in 2011.8“Stability Maintenance” Expenditures Exceed Military Budget, Straining People’s Livelihoods
To illustrate how alarmingly high stability maintenance costs are,
researchers often compare them to military expenditures. The 514 billion
yuan [~$82.52 billion] spent on stability maintenance in 2009 was close to the 532.1 billion yuan [~$85.43 billion] in military expenditures that year. The 624.421 billion yuan [~$100.25 billion] for stability maintenance in 2011 surpassed the military budget of 601.1 billion yuan [~$96.51 billion] the same year.
Public security expenditures chiefly fund organs of state-sanctioned violence. Of the 624.421 billion yuan [~$100.25 billion] public security budget in 2011, the budget for the following five groups account for 506.4 billion yuan [~$81.30
billion], or 81 percent, of the total public security budget: the armed
police, public security, courts, judicial administration system,9
and anti-smuggling police. Of this total, the portion for public
security departments (including state security, and public security for
railway and civil aviation) was more than 322.562 billion yuan [~$51.79 billion]. The second-largest portion was 104.6 billion yuan
[~$16.79 billion] for the paramilitary police. The budget for the
courts—responsible for resolving social disputes—was no more than 60.804
billion yuan [~$9.76 billion], only 9.7 percent of the total.10 It
must be pointed out that, unlike in countries with separation of
power—where the courts are independent of the executive and legislative
branches of the government—the court system in China is controlled by
the CPC and is considered part of the stability maintenance system.
Stability maintenance has become an important measure of the
political performance of government officials. Local officials are
compelled to prioritize stability maintenance above other issues
affecting people’s livelihoods such as social security and education.
According to local government budget implementation in 2009, public
security expenditures in many regions exceeded the amount spent on
social security, employment, education, environmental protection,
science and technology innovation and affordable housing. In Huizhou
city, Guangdong Province, at least 36.64 million yuan [~$5.88
million] was spent on leasing surveillance monitors alone. The fund for
11 social security services including employment subsidy, state
enterprise bankruptcy subsidy, medical insurance for seniors, and
emergency relief totaled only 50.4 million yuan [~$8.09 million].11 In 2007 in Guangzhou (the capital of Guangdong province), expenses for social stability maintenance totaled 4.4 billion yuan [~$710 million], much more than the social security fund of 3.52 billion yuan [~$ 560 million].12
As mentioned above, the main cause of China’s social conflicts is
excessive extraction of resources by government at all levels, creating a
vicious cycle between stability maintenance and economic development.
Local officials need GDP growth to demonstrate their effectiveness, and
are compelled to undertake a large number of projects. The most
profitable projects are real estate and polluting industries (because
China has very lax oversight on environmental pollution, and one can pay
very little, or even nothing, for polluting). However, real estate
development involves land acquisition and property demolition, and
industrial pollution triggers environmental rights defense actions by
local residents. The more the economy develops, the more conflicts there
are between government officials and the people, and the more stability
maintenance is needed, requiring greater expenditures. City and county
governments all feel increasing strain in funding stability maintenance.
The November 2011 protest against the government’s land grab in Wukan
Village, Shanwei City, Guangdong Province, lasted several months. The
Shanwei municipal government spent a large sum to “maintain stability”
in the village. The party secretary of Shanwei, Zheng Yanxiong, vented
in his internally circulated speech: “You think it’s free to hire armed
police? Hundreds of armed police and regular police living here has made
our mayor’s wallet thinner by the day.”13The Astronomical Price of Stability Maintenance is a Heavy Financial Burden on Local Governments
In his 2010 article, “The Astronomical Cost of Stability Maintenance is Eroding Local Government,” in Lianhe Zaobo,
Xie Yue reported: “According to published Chinese government
statistics, on average, local governments shoulder about 70 percent of
their stability maintenance budget, with the remaining 30 percent coming
from the central government. …”14
“There is a great regional difference in local governments’ spending
on ‘stability maintenance.’ The more developed the area, the more it can
spend.” And the converse is also true: the poorer the area, the less it
can afford. “In the past 15 years, the top five biggest municipal
spenders on public security, procuratorate, court, judicial
administration system, and people’s armed police were Guangdong,
Jiangsu, Shanghai, Zhejiang and Shandong. The smallest five spenders
were Guizhou, Gansu, Qinghai, Tibet and Ningxia. However, the stability
maintenance expenditures of a poor region may appear small in absolute
amounts, those may eat up a big portion of its revenue. In 2008, number
one-ranked Guangdong spent nearly 40 billion yuan [~$6.42
billion] on public security, procuratorate, court system and people’s
armed police. Bottom-ranking Ningxia spent only 1.9 billion yuan [~$300 million],” Xie Yue wrote.15
Even though spending was relatively less in backward areas, it still
accounted for a large percentage of local budgets. Xie Yue said: “In
2008, only 6.34 percent of Shanghai’s annual expenditure was on public
security, procuratorate, court system, and people’s armed police. But in
economically backward Ningxia this percentage was 28.4 percent. These
statistics show that backward areas were under much greater economic
stress due to ‘stability maintenance’ than developed areas. Many
provinces run in fiscal deficit due to ‘stability maintenance.’”16
The above took place during a period when China’s economy was
developing rapidly and income for local government was relatively good.
Since 2009, income for local governments has decreased. To resolve local
financial difficulties, the central government had to issue—on behalf
of the local governments of 31 cities and provinces—three-year bonds
worth 700 billion yuan [~$112.39 billion] to maintain the
financial health of local governments. In the period March-August, 2012,
more than 210 billion yuan [~$33.72 billion] worth of bonds
matured, but local governments were unable to repay the debts. All they
could do was play the game of borrowing new debt to repay old debt.17
Beginning 2012, local governments have been facing even greater
financial pressure. With the introduction of stricter real estate market
controls in 2011, local land finances were hard hit. Chinese Index
Institute statistics indicate that in the first half of 2012, the total
value of land transfer in China’s 300 cities was 652.598 billion yuan
[~$104.77 billion], a decrease of 38 percent from the same period the
previous year. Even in the wealthiest regions of the country—Beijing,
Shanghai, Zhejiang and Guangdong—the revenue growth rate for the first
half of 2012 went down to less than 10 percent from 20-to-30 percent in
the same period last year. Due to the difficulties in transitioning from
an export economy to a consumer market economy, the developed southeast
coastal region also suffered serious financial downturn. Rich areas
such as Shenzhen and Dongguan are on the verge of fiscal deficit.18The Two-Faced Role of Regional Governments: Creator of Social Unrest and Maintainer of Stability
According to statistics provided by the article “Public Security Bill,” in the May 2011 issue of Caijing Magazine,
the public security expenditures of local governments surpassed those
of the central government. The amounts were 521.968 billion yuan [~$83.80 billion] and 102.452 billion yuan [~$16.45 billion], respectively, representing a ratio of greater than 3:1.19 This shows that local governments are the prime actors of stability maintenance.
Public security expenditures account for a large portion of local
governments’ total expenditures. The hidden fact is that the local
government benefits from land acquisition and housing demolition. That
is, the government acquires the land before it sells it, and pockets the
profits. It is also the behind-the scenes protector of local polluting
enterprises. In 2010, nationally, land transfer funds accounted for 76.6
percent of local government revenues.20 In 2005, 80 percent of corrupt Chinese officials dealt in land.21
The fact these two figures reveal is that without the income from land
transfers, most of local government finances would collapse. Officials
would no longer be able to wear expensive clothes, eat fancy food, live
in mansions, and drive luxury cars. As for the local government’s
protection of polluting enterprises economic considerations are a
factor. Polluting enterprises in many areas, especially in poor areas,
are supported by the local governments and are also big tax payers.
Wucheng County, Dezhou City, Shandong Province became a famous well-off
village after developing a dairy industry. But many villagers in recent
years died of cancer. The source of cancer is the Shandong Gaoxinrun
Agricultural Chemical Co., Ltd., a big tax payer.22 The largest polluting enterprises in Yuanshi County, Henan Province are also the local star enterprises and big tax payers.23
We can see from this that local governments are the real culprits in
the disputes and protests caused by land acquisition and industrial
pollution. But since the local government has the executive power and
judicial administrative power, they can use violent means to suppress
people at any time. A great number of cases demonstrate that those whose
interests have been harmed tried to get justice through legal channels.
But either their cases are not accepted by the local courts or they
lose their cases after exhausting their energy and money. If the people
protest, they will most likely be violently suppressed by police
dispatched by local authorities. They may even be arrested and labeled
protest leaders and end up in prison. When we see the logic of the
relationship of the above facts, things are terrifyingly simple: China’s
local governments at different levels are themselves creators of social
conflict, and they are the biggest threat to public security.
In summary, “stability maintenance” in China has become an industrial
chain. At its top is the government’s plundering through land
requisition, property demolition, and industrial pollution in order to
preserve tax and financial revenues. At the middle of the chain is the
government’s interception of complaints and petitions, crackdown,
control of public opinion, propaganda, and informants. At the end of the
chain is the judicial system, mental hospitals,24
and prisons. This new industrial chain provides a huge profit-sharing
opportunity for China’s government officials and their relatives at all
levels. Everyone—from the central government ministries to local
government and the poor countryside—is connected to this chain of
interests. Such an iron-fisted stability maintenance system not only
makes it financially difficult for the government to continue to
“maintain stability,” but also drags China into a vicious cycle of “the
more one tries to maintain stability, the less stable it is.”He Qinglian (何清涟), is an economist and author of
China’s Pitfall and Media Control in China. A graduate of Hunan Normal
University, with a master’s degree in economics from Shanghai’s Fudan
University, He Qinglian worked in the propaganda department of the
municipal Communist Party Committee in Shenzhen before becoming a writer
and editor for the Shenzhen Legal Daily and working at Jinan
University. He Qinglian moved to the United States in 2001.

Ma Ying-jeou won in 2012 Taiwan general
election, a result that the Blue camp and the business sector of the
Island cheered for, and China and the United States felt relieved
with.

This time, Ma Ying-jeou got 6,872,524
votes, making up 51.6% of the ballots; Tsai Ing-wen got 6,083,443
votes, or 45.7%; the two sides differed by about six percentage
points. This surely wasn't a result of Tsai not having enough
charisma. To be fair, no other person from the Green camp could have
done a better job than she did. After Chen Shui-bian imprisoned for
corruption, the Democratic Progressive Party (DPP), with its
reputation severely tarnished, didn't quite have the strength to
restart. At such a time, Tsai Ing-wen was the only opponent who, with
her clean image, would make the Blue camp and Beijing pull out every
stop to secure victory in the election. The real issue reflected by
the election result is: Taiwan is too far away from the United States
and too close to China. This conclusion is backed by the evaluation
result from the International Committee for Fair Elections in Taiwan,
which comprised twenty-one observers from eight countries. The
Committee said that in this round of presidential and legislative
elections, the public of Taiwan has by and large exhibited the free
will in casting their votes. But during the election campaign there
was still unfairness, in particular these two issues: influence of
past authoritarian rule and foreign intervention.

Reality of China: A Mess of Wanton Graffiti Drawn with the Pen of Power

By He Qinglian on November 3, 2011

I remember when Mao Zedong came to be
the ruler of China, he described the country as a destitute state, a
sheet of blank paper on which the newest and most beautiful picture
can be drawn. After that, for three decades Mao Zedong ruled and he
left on China his powerful drawings, done in a manner that was
willful and wild. In the three decades that followed, officials at
various levels at the central and local governments have been
painting the country with a host of methods at will. Now, with little
white space left, the drawings on the blank sheet of China are
testing the lowest limits of human esthetic values and moral
principles.

In late December 2011, the People’s Daily picked as usual the top ten news stories of the year. Unfortunately in that list I found that the social pain nerves of the most superior mouthpiece have ceased to function altogether. That newspaper would soon become rouge powder that Beijing uses to make itself look good.

It
has become a national consensus that China must implement democracy,
and that the sooner that happens, the better. Yet divergent opinions on
how democracy is to be implemented, and how great a price the populace
is willing to pay to bring about democracy remain. The reason for this
is simple: each class has its own interests to consider.